EXHIBIT 10.1
CE SOFTWARE, INC.
2000 STOCK OPTION PLAN
THIS 2000 STOCK OPTION PLAN (the "Plan"), effective as of the date of its
approval by the Company's shareholders, the 27th day of April, 2000, is hereby
adopted and established by CE Software, Inc., an Iowa corporation, (the
"Company") and will be maintained by the Company for the purpose of providing
stock options for selected management, key employees, Consultants and
Non-Employee Directors as provided herein.
Article I -- Purpose
The purpose of the Plan is to promote the long-term success of the Company
and the creation of shareholder value by providing additional incentive to those
officers, employees, Consultants and Non-Employee Directors of the Company and
any Subsidiary whose substantial contributions are essential to the continued
growth and success of the business of the Company or Subsidiary in order to
strengthen their commitment to the Company or Subsidiary, to motivate them to
faithfully and diligently perform their assigned responsibilities and to attract
and retain competent and dedicated individuals whose efforts will result in the
long-term growth and profitability of the Company and its Subsidiaries. To
accomplish such purposes, the Plan provides that the Company may grant Incentive
Stock Options and Non-Qualified Stock Options.
Article II -- Definitions
2.01 Scope. For purposes of this Plan, unless the language or context
clearly indicates that a different meaning is intended, capitalized terms have
the meaning specified in this Article.
2.02 Definitions. The following terms used in this Plan shall have the
following meanings:
"Agreement" shall mean the written agreement evidencing the grant of an
Award and setting forth the terms and conditions thereof.
"Award" shall mean, individually or collectively, a grant under this Plan
to any Eligible Person or Non-Employee Director of Incentive Stock Options,
Non-Qualified Stock Options or both as the context requires.
"Board" shall mean the Board of Directors of the Company, as constituted
from time to time.
"Cause" shall mean the commission of an action against or in derogation of
the interests of the Company or Subsidiary which, if proven in a court of law,
would constitute a violation of the criminal code or similar law; divulging
confidential information about the Company to the public; or the performance of
any similar action that the Committee, in its
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sole discretion, may deem to be sufficiently injurious to the interest of the
Company to constitute cause for termination.
"Change in Control" shall mean any one of the following events:
(1) any "person" or group of persons acting in concert (as defined
in Sections 13(d) and 14(d) of the Exchange Act), other than the Company,
its officers or directors, or a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
Subsidiary, acquires, directly or indirectly, after the Effective Date of
this Plan "beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act) of any class of securities (not including securities
acquired in a transaction described in subsection 2 below) representing at
least thirty percent (30%) of the combined voting power of the Company;
(2) the stockholders of the Company approve a merger, consolidation,
recapitalization or similar transaction, unless the persons who were
shareholders immediately prior to such transaction will collectively own
at least fifty percent (50%) of the combined voting power of all classes
of stock of the Company (or of the surviving corporation in the event of a
merger) outstanding immediately after such transaction; or
(3) the stockholders of the Company approve a plan of complete
liquidation of the Company or a sale of all or substantially all of the
assets of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
regulations of the Department of Treasury promulgated pursuant thereto.
"Committee" shall mean a committee designated by the Board to administer
the Plan and to perform the functions set forth herein.
"Company" shall mean CE Software, Inc., an Iowa corporation, or any
successor thereto.
"Consultant" shall mean an advisor or consultant who is an independent
contractor with respect to the Company or a Subsidiary, and who provides bona
fide services (other than in connection with the offer or sale of securities in
a capital raising transaction) to the Company or a Subsidiary; who is not an
employee, officer, or director of the Company or any of its Subsidiaries; and
whose services the Committee determines are of vital importance to the overall
success of the Company or any of its Subsidiaries.
"Continuous Employment" shall mean continuous employment with the Company
or a Subsidiary as an employee, Consultant or Non-Employee Director or any
combination thereof without any interruption or termination of employment or
service. Continuous Employment shall not be considered interrupted in the case
of sick leave, military leave, disability leave or any other leave of absence or
temporary cessation of service approved by the Company or a Subsidiary.
"Continuously Employed" shall mean the status of a Participant who has
maintained Continuous Employment.
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"Covered Employee" shall mean a covered employee within the meaning of
Section 162(m)(3) of the Code. By way of explanation, as of the date of adoption
of this Plan, a Covered Employee is generally defined in the Code to include any
person who is a company's CEO or who is one of a company's four highest paid
officers during a particular fiscal year if all wages paid to such person,
including the taxable value of all exercised options, exceeds $1 million for
that fiscal year.
"Disability" shall mean, if the Participant is covered by an individual or
group long-term disability policy paid for by the Company or a Subsidiary,
disability as defined in such policy without regard to any waiting period. If
the Participant is not covered by such a policy, Disability means the
Participant suffering a sickness, accident or injury which in the judgment of a
physician satisfactory to the Company, prevents the Participant from performing
substantially all of his or her normal duties for the Company and/or its
Subsidiaries. As a condition to any benefits, the Company may require the
Participant to submit to such physical or mental evaluations and tests as the
Company deems appropriate. "Disabled" shall mean to suffer from a Disability.
Disability and Disabled shall not be applied to a Participant who has been and
is Continuously Employed.
"Effective Date" shall mean the date first written above on which this
Plan was adopted by the Board.
"Eligible Person" shall have the meaning given to it by Article V.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the market price of a Share, determined by
the Committee in good faith on such basis as it deems appropriate; provided,
however, if the Shares are traded on the Nasdaq Stock Market, either National
Market or SmallCap, or a major exchange such as the New York or American stock
exchanges, the determination of Fair Market Value by the Committee shall be the
average of the high and low prices reported by Nasdaq or by such major exchange
on the date of the grant, or if such date is not a trading date, on the last
trading date immediately prior to the date of grant. Such determination shall be
conclusive and binding on the Participant and all other persons.
"Incentive Stock Option" shall mean an Option within the meaning of
Section 422 of the Code, or any successor provisions thereto.
"Non-Employee Director" shall mean a director of the Company or a
Subsidiary that is not treated as a common-law employee of the Company or
Subsidiary.
"Non-Qualified Stock Option" shall mean an Option that is not an Incentive
Stock Option.
"Option" shall mean an Incentive Stock Option, a Non-Qualified Stock
Option, or either or both of them, as the context requires.
"Participant" shall mean a person to whom an Award has been granted under
the Plan.
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"Plan" shall mean the CE Software, Inc. 2000 Stock Option Plan, as amended
or restated from time to time.
"Retirement" shall mean termination of employment or services with the
Company or a Subsidiary by a Participant (other than as a result of death,
Disability or Cause), if the Participant is at least sixty-two (62) years of
age, or such greater age as may be set by the Company or Subsidiary as a
standard retirement age, which minimum age shall not exceed sixty-five (65)
years.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Share" shall mean shares of common stock, $0.10 par value, of the
Company.
"Statement" shall have the meaning given to it by Section 7.03.
"Subsidiary" shall mean any corporation in a descending, unbroken chain of
corporations, beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain. For purposes of this definition,
corporation shall include any business entity, including but not limited to
partnerships and limited liability companies.
"Ten-Percent Stockholder" shall mean an Eligible Person, who, at the time
an Incentive Stock Option is to be granted to such Eligible Person, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, a parent or a Subsidiary within the meaning of Sections 424(e) and
424(f), respectively, of the Code.
"Transaction" shall have the meaning given to it by Section 9.03.
"Vesting Date" shall mean as to each Award the first annual anniversary of
the date of the Award and the monthly anniversary dates thereafter.
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Article III -- Administration
3.01 Committee Administration. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of two or more Company
directors who are Non-Employee directors, as defined in paragraph (b)(3)(i) of
Rule 16b-3, or any other successor rule thereto, under the Exchange Act.
Additionally, the Committee shall satisfy such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Code Section 162(m)(4)(C), or any successor
provision thereto. The Committee shall hold meetings at such times as may be
necessary for the proper administration of the Plan. The Committee shall keep
minutes of its meetings, which may be separate or a part of the minutes of
regular or special meetings of the Board. A majority of the Committee shall
constitute a quorum and a majority of a quorum may authorize any action. Any
decision reduced to writing and signed by all of the members of the Committee
shall be fully effective as if it had been made at a meeting duly held. All
actions, determinations or interpretations made in good faith with respect to
the Plan or any Option shall be conclusive and binding on the Participants and
all other persons. The Company shall pay all expenses incurred in the
administration of the Plan.
3.02 Powers. Subject to the express terms and conditions set forth herein,
the Committee shall have the power to perform any and all actions,
determinations and interpretations related to the administration of the Plan,
including, without limitation, the power from time to time:
(a) to determine those Eligible Persons to whom Awards shall be
granted under the Plan and the number of Shares subject to such Awards to
be granted to each Eligible Person and to prescribe the terms and
conditions (which need not be identical) of each Award, including the
purchase price per share of each Award, and the forfeiture provisions, if
any, if the Employee leaves the employment of the Company or a Subsidiary
within a prescribed time or acts against the interests of the Company
within a prescribed time;
(b) to construe and interpret the Plan, the Awards granted hereunder
and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the
Plan or in any Agreement, and (subject to the provisions of Article X
below) to amend the terms and conditions of any outstanding Award to the
extent such terms and conditions are within the discretion of the
Committee as provided in the Plan, in the manner and to the extent it
shall deem necessary or advisable to make the Plan fully effective;
(c) to determine the duration and purposes for leaves of absence
which may be granted to a Participant without constituting a termination
of employment or service for purposes of the Plan;
(d) to determine the terms and conditions of each Award granted to a
Covered Employee so that the Company or Subsidiary may claim a tax
deduction in connection with non-qualified options, or incentive options
that have a non-qualified component; and
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(e) generally, to exercise such powers and to perform such acts as
are deemed necessary or advisable to promote the best interests of the
Company with respect to the Plan.
Article IV -- Stock Subject to Plan
4.01 Number of Shares. The maximum number of Shares that may be issued or
transferred pursuant to Awards granted under this Plan is three hundred thousand
(300,000) Shares of common stock (or the number and kind of shares of stock or
other securities that are substituted for those Shares or to which those Shares
are adjusted pursuant to Article IX), and the Company shall reserve for the
purposes of the Plan, out of its authorized but unissued Shares, such number of
Shares.
4.02 Limitation. For a period of one year after the effective date of this
Plan, the number of Shares for which Options may be granted by the Committee
shall not exceed a number that after conversion of such Options into Shares of
the Company would equal more than twenty percent (20%) of the total outstanding
and issued Shares of the Company.
4.03 Terminated Options. Whenever any outstanding Award or portion thereof
expires, is canceled or is otherwise terminated (other than by exercise of the
Award), the Shares allocable to the unexercised portion of such Award may again
be the subject of Awards hereunder.
Article V -- Eligibility
Eligible Persons shall be the officers, employees and Consultants of the
Company and any Subsidiary who, in the view of the Committee, occupy managerial,
professional, or key positions, or who provide valuable services, and who, in
the view of the Committee, have the capability of making a substantial
contribution to the success of the Company. In making the selection and in
determining the form and amount of Awards, the Committee may give consideration
to the functions and responsibilities of the individual, past and potential
contributions to profitability and sound growth, the value of the individual's
services to the Company, and any other factors deemed relevant by the Committee.
The Committee shall have full and final authority on selecting those Eligible
Persons who will receive Awards, provided, however, only individuals who are
treated as common-law employees of the Company or any Subsidiary pursuant to the
relevant provisions of the Code may receive Incentive Stock Options.
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Article VI -- Options
The Committee may grant Options to any Eligible Person in accordance with
the Plan, the terms and conditions of which shall be set forth in an Agreement.
The provisions of the various Agreements entered into under the Plan need not be
identical. Each Option and Agreement shall be subject to the following
conditions:
6.01 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Option shall be set
forth in the Agreement, provided, however, that the purchase price per Share
under (a) each Non-Qualified Stock Option shall not be less than eighty-five
percent (85%) of the Fair Market Value of a Share at the time the Option is
granted, (b) each Incentive Stock Option shall not be less than one hundred
percent (100%) of the Fair Market Value of a Share at the time the Option is
granted, (c) each Incentive Stock Option granted to a Ten-Percent Stockholder
shall not be less than one hundred ten percent (110%) of the Fair Market Value
of a Share at the time the Option is granted and (d) each Option granted to a
Covered Employee shall not be less than one hundred percent (100%) of the Fair
Market Value of a Share at the time the Option is granted. In the case of a
Non-Qualified Stock Option, an Agreement may specify a purchase price that
varies in accordance with a predetermined formula while the Non-Qualified Stock
Option is outstanding.
6.02 Number of Shares. Each Agreement shall specify the number of Shares
subject to the Option. Options granted to any Participant in a single fiscal
year of the Company shall not cover more than 100,000 shares, as adjusted
pursuant to Article IX.
6.03 Duration. Options granted hereunder shall be for such term as the
Committee shall determine, provided, however, that no Incentive Stock Option
shall be exercisable after the expiration of ten (10) years from the date it is
granted, or five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder. The Committee may, subsequent to the granting of any
Option, extend the term thereof but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
6.04 Non-transferability.
(a) No Option granted hereunder shall be transferable by the
Participant to whom such Option is granted otherwise than by will or the
laws of descent and distribution. An Option may be exercised during the
lifetime of such Participant only by the Participant, or the Participant's
guardian or legal representative. The terms of such Option shall be
binding upon the beneficiaries, executors, administrators, heirs,
assignees and successors of the Participant.
(b) At the discretion of the Committee and in accordance with the
provisions of Section 14.03, any Agreement may provide for the designation
of a beneficiary of the Participant, who may exercise the Option after the
Participant's death and obtain the economic benefits thereof, subject to
the consent of the Participant's spouse where required by law.
6.05 Vesting. Subject to Section 6.06, and unless otherwise set forth in
the Agreement, each Option shall become exercisable as to thirty-three and
one-third percent (33
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1/3%) of the Shares covered by the Option on the first Vesting Date occurring
after the date that the Option was granted and two and seven-ninths percent (2
7/9%) on each subsequent Vesting Date, during a period of Continuous Employment
and until such time as the Option becomes fully vested. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or in
part, at any time after becoming exercisable, but not later than the date the
Option expires. The Committee may accelerate the exercisability of any Option or
portion thereof at any time.
6.06 Accelerated Vesting. Notwithstanding the provisions in Section 6.05,
each Option granted to a Participant shall become vested in full and immediately
exercisable upon the occurrence of a Change in Control and upon the death,
Retirement or Disability of the Participant.
6.07 Termination of Employment. In the event that a Participant ceases to
be employed by, or ceases to provide services to, the Company and all
Subsidiaries, any outstanding Options held by such Participant shall, unless
this Plan or the Agreement evidencing such Option provides otherwise, terminate
as follows:
(a) If the Participant's termination of employment is due to his or
her death, Disability, or Retirement, the Option shall become vested in
full and immediately exercisable for two (2) years after the Participant's
last day of employment, and shall thereafter terminate;
(b) If the Participant's termination of employment is a termination
for Cause, the Option shall be canceled and rescinded effective as of the
date of such termination; and
(c) If the Participant's termination of employment is for any other
reason (including a Participant's ceasing to be employed by a Subsidiary
as a result of the sale of such Subsidiary or an interest in such
Subsidiary), the Option shall be exercisable for a period of three (3)
months after the Participant's last day of employment with the Company or
its Subsidiary, and shall thereafter terminate. Payment of any accrued
vacation pay or severance pay shall not extend the last day of employment.
Notwithstanding the foregoing, the Committee may provide, either at the
time an Option is granted or thereafter, that the Option may be exercised after
the periods provided for in this Section, but in no event beyond the term of the
Option. Any portion of an Incentive Stock Option exercised more than one year
after the date of death or disability of the Participant, or three months after
termination of the employment of the Participant, shall become a Non-Qualified
Stock Option.
6.08 Cancellation and Recision of Options. Unless the Agreement specifies
otherwise, the Committee may cancel and rescind any unexpired, unpaid or
deferred Options (whether vested or unvested pursuant to this Article VI) at any
time if the Participant is not in compliance with the following conditions:
(a) A Participant shall not render services for any organization or
engage directly or indirectly in any business which, in the judgment of
the Committee, is or becomes competitive with the Company or any
Subsidiary, or which organization or
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business, or the rendering of services to such organization or business,
is or becomes prejudicial to or in conflict with the interests of the
Company or any Subsidiary. For Participants whose employment has
terminated, the judgment of the Committee shall be based on the
Participant's position and responsibilities while employed by the Company
or its Subsidiaries; the Participant's post-employment responsibilities
and position with the other organization or business; the extent of past,
current, and potential competition or conflict between the Company (or
Subsidiary) and the other organization or business; the effect of the
Participant's assuming the post-employment position on the Company's or
its Subsidiary's customers, suppliers, and competitors; and such other
considerations as are deemed relevant given the applicable facts and
circumstances. A Participant may, however, purchase as an investment or
otherwise, stock or other securities of any such organization or business
so long as such stock or securities are publicly-traded and do not
represent a greater than two percent (2%) equity interest in the
organization or business.
(b) A Participant shall not, without prior written authorization
from the Company, disclose to anyone outside the Company or Subsidiaries,
or use in other than the Company's or Subsidiary's business, any
information or materials determined to be confidential by the Committee
relating to the business of the Company or its Subsidiaries, acquired by
the Participant either during or after employment with the Company or its
Subsidiaries.
(c) Upon exercise, payment or delivery pursuant to an Option, the
Participant shall certify on a form acceptable to the Committee that he or
she is in compliance with the terms and conditions of the Plan. Failure to
comply with the provisions of paragraph (a) or (b) of this Section 6.08
prior to, or during the six months after, any exercise, payment or
delivery pursuant to an Option shall cause such exercise, payment or
delivery to be rescinded. The Company shall notify the Participant in
writing of any such rescission within two years after such exercise,
payment or delivery. Within ten days after receiving such notice from the
Company, the Participant shall pay to the Company the amount of any gain
realized or payment received as a result of the rescinded exercise,
payment or delivery pursuant to an Option. Such payment shall be made
either in cash or by returning to the Company the number of shares of
Common Stock that the Participant received in connection with the
rescinded exercise, payment or delivery.
6.09 Annual Limitation. To the extent that the aggregate Fair Market Value
(measured by the Fair Market Value of the Shares at the date of grant) of
Incentive Stock Options which become exercisable for the first time by any
Participant during any calendar year exceeds one hundred thousand dollars
($100,000), the excess of such Options shall be treated as Non-Qualified Stock
Options.
Article VII -- Payment for Option Shares
7.01 Method of Exercise. The exercise of an Option shall be made only by a
written notice delivered to the Secretary of the Company at the Company's
principal executive office, specifying the number of Shares to be purchased and
accompanied by payment therefor and otherwise in accordance with the Agreement
pursuant to which the Option was granted. The purchase price for any Shares
purchased pursuant to the exercise of
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an Option shall be paid in full upon such exercise in cash, by check, or, at the
discretion of the Committee and upon such terms and conditions as the Committee
shall approve, by any other method approved by this Article. If requested by the
Committee, the Participant shall deliver the Agreement evidencing the Option to
the Secretary of the Company who shall endorse thereon a notation of such
exercise and return such Agreement to the Participant.
7.02 Provision for Loans. Subject to the terms and conditions of this
Section and any rules that the Committee may impose from time to time, the
Company or any Subsidiary may make loans to a Participant in connection with the
exercise of an Option as follows:
(a) Amount. No loan made under the Plan shall exceed the sum of (a)
the aggregate purchase price payable pursuant to the Option with respect
to which the loan is made, plus (b) if applicable, the amount of the
reasonably estimated withholding taxes payable by the Participant with
respect to the exercise of the Option. In no event may any such loan
exceed the Fair Market Value, at the date of exercise, of the Shares
received pursuant to such exercise, and if the Shares are newly issued,
the par value of the Shares being purchased shall be paid in cash.
(b) Term. No loan shall have an initial term exceeding five (5)
years, provided, however, that loans under the Plan shall be renewable at
the discretion of the Committee, and provided, however, that the
indebtedness under each loan shall become due and payable, as the case may
be, on a date no later than (a) one (1) year after termination of the
Participant's employment due to Retirement, death or Disability, or (b)
the date of termination of the Participant's employment for any reason
other than Retirement, death or Disability.
(c) Security. A loan shall have full recourse against the
Participant and shall be secured by a pledge of Shares with a Fair Market
Value of not less than the principal amount of the loan. After any
repayment of a loan, pledged Shares no longer required as security may be
released to the Participant.
(d) Other Provisions. Every loan shall meet all applicable laws,
regulations and rules of the Federal Reserve Board and shall satisfy the
applicable laws and regulations under the Code for imputed interest.
7.03 Alternative Payment Method. With the approval of the Committee and
subject to rules that the Committee may impose from time to time, the
Participant may pay for the purchase price of Shares purchased pursuant to an
exercise of an Option by using Shares already owned and held for at least six
(6) months, the Participant shall deliver a notarized statement of ownership
(hereinafter, "Statement"), in a form to be determined by the Committee, to the
Company indicating that the Participant owns Shares of sufficient number and
value to cover the purchase price of the Shares purchased pursuant to the
exercise of the Option. However, no surrender of the actual stock certificates
relating to the Shares listed in the Statement is necessary. The number of
Shares in the Statement will be treated as a constructive payment of the
purchase price, and the Participant shall retain ownership of such Shares. The
Company shall issue a stock certificate for a number of Shares equal to the
Shares purchased pursuant to the Option minus the number of Shares used for the
constructive payment. All Shares listed in the Statement shall be valued at
their Fair Market Value on the date that the Option is exercised.
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7.04 Exercise/Sale. Subject to rules that the Committee may impose from
time to time, all or any part of the purchase price of Shares purchased pursuant
to an exercise of an Option and any related withholding taxes may be paid by
delivering (on a form prescribed by the Committee) an irrevocable direction to a
securities broker approved by the Committee to sell all or part of the Shares
being purchased and to deliver all or part of the sales proceeds to the Company.
7.05 Exercise/Pledge. Subject to rules that the Committee may impose from
time to time, all or any part of the purchase price of Shares purchased pursuant
to an exercise of an Option and any related withholding taxes may be paid by
delivering (on a form prescribed by the Committee) an irrevocable direction to
pledge all or part of the Shares being purchased to a securities broker or
lender approved by the Committee, as security for a loan, and to deliver all or
part of the loan proceeds to the Company.
7.06 Rights of Participants. No Participant shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (a)
the Option shall have been exercised pursuant to the terms thereof, (b) the
Company shall have issued and delivered the Shares to the Participant, (c) the
Participant's name shall have been entered as a stockholder of record on the
books of the Company and (d) the provisions of Section 13.07 have been
satisfied. Thereupon, the Participant shall have full voting, dividend and other
ownership rights with respect to such Shares.
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Article VIII -- Non-Qualified Stock Option Grants to Non-Employee Directors
8.01 Initial Grants. Each Non-Employee Director who first becomes a member
of the Board or a board of a Subsidiary shall receive a one-time grant of a
Non-Qualified Stock Option of one thousand (1,000) Shares (subject to adjustment
under Article IX). Such Non-Qualified Stock Option shall be granted on the date
when such Non-Employee Director first becomes a member and shall become
exercisable as to thirty-three and one-third percent (33 1/3%) of the Shares
covered by such Option on the first Vesting Date occurring after the date that
the Option was granted and two and seven-ninths percent (2 7/9%) on each
subsequent Vesting Date, during a period of Continuous Employment and until such
time as the Option becomes fully vested. To the extent not exercised,
installments shall accumulate and be exercisable, in whole or in part, at any
time after becoming exercisable, but not later than the date the Option expires.
Each Non-Employee Director serving on the date when the first options are
granted under this Plan shall receive an initial grant as if first becoming a
member of the Board or a board of a Subsidiary except the amount shall be five
hundred (500) Shares (subject to adjustment under Article IX).
8.02 Annual Grants. Upon the conclusion of each regular annual meeting of
the Company's stockholders held in the year 2001 or thereafter, each
Non-Employee Director who will continue serving as a member of the Board or a
board of a Subsidiary thereafter shall receive a Non-Qualified Stock Option
covering two thousand (2,000) Shares (subject to adjustment under Article IX),
provided, however, such Non-Qualified Stock Option shall be reduced to one
thousand (1,000) Shares if the same Non-Employee Director received the
Non-Qualified Stock Option described in Section 8.01 during the same calendar
year. The vesting of annual grants shall be the same as for initial grants as
described in Section 8.01.
8.03 Accelerated Exercisability. All Non-Qualified Stock Options granted
to a Non-Employee Director under this Article shall also become exercisable in
full in the event of:
(a) The termination of such Non-Employee Director's service because
of death, Disability or Retirement; or
(b) A Change in Control with respect to the Company.
8.04 Exercise Price. The Exercise Price under all Non-Qualified Stock
Options granted to a Non-Employee Director under this Article shall be equal to
one hundred percent (100%) of the Fair Market Value of a Share on the date of
grant, payable in one of the forms described in Article VII.
8.05 Term. All Non-Qualified Stock Options granted to a Non-Employee
Director under this Article shall terminate on the earliest of (a) the 10th
anniversary of the date of grant, (b) the date three (3) months after the
termination of such Non-Employee Director's service for any reason other than
death, Disability or Retirement or (c) the date twenty-four (24) months after
the termination of such Non-Employee Director's service because of death,
Disability or Retirement.
8.06 Affiliates of Outside Directors. The Committee may provide that the
Non-Qualified Stock Options that otherwise would be granted to a Non-Employee
Director under this Article shall instead be granted to an affiliate of such
Non-Employee Director. Such
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affiliate shall then be deemed to be a Non-Employee Director for purposes of the
Plan, provided, however, that the service-related vesting and termination
provisions pertaining to the Non-Qualified Stock Options shall be applied with
regard to the service of the Non-Employee Director.
8.07 Additional and Alternative Option Grants. Notwithstanding the
foregoing provisions of this Article VIII, the Committee may, in its sole
discretion, grant Non-Qualified Stock Options to Non-Employee Directors for such
additional or alternative number of Shares as determined by the Committee. The
Agreement evidencing each additional or alternative Non-Qualified Stock Option
shall set forth the number of Shares, the exercise price, the manner in which
the Option becomes exercisable, the date the Option shall terminate, and such
other terms and conditions as the Committee deems advisable.
Article IX -- Adjustment and Modification of Options
9.01 Change in Capitalization. In the event of any change in the
outstanding Shares of the Company by reason of a stock dividend, stock split,
recapitalization, merger, consolidation or combination (by reclassification or
otherwise), subdivision, exchange of shares or other similar corporate change,
the Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of:
(a) the aggregate number and kind of Shares issuable under the Plan
pursuant to Article IV;
(b) the number and kind of Shares covered by Awards made under the
Plan;
(c) the limitations set forth in Section 6.02;
(d) the number of Non-Qualified Options to be granted to
Non-Employee Directors pursuant to Article VIII; or
(e) the exercise price under each outstanding Option.
Any fractional Share resulting from any such adjustment shall be rounded up to
the nearest whole Share unless the Committee determines a different rounding
method. The adjustment provided for by this Section shall be conclusive and
binding on all Participants and all other persons.
9.02 Incentive Stock Options. Any such adjustment in the Shares or other
securities subject to outstanding Incentive Stock Options (including any
adjustments in the purchase price) shall be made in such manner as not to
constitute a modification as defined by Section 424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 422 and 424 of the Code.
9.03 Exercise after a Transaction. In the event of any liquidation,
dissolution, merger, consolidation or other reorganization (collectively, a
"Transaction") of the Company, the Options and Agreements shall continue in
effect in accordance with their respective terms, except that following a
Transaction each Participant, upon the exercise of
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any Option, shall be entitled to receive in respect of each Share subject to an
Option the same number and kind of stock, securities, cash, property or other
consideration, as the case may be, that each holder of a Share was entitled to
receive in the Transaction in respect of a Share.
9.04 Modification and Assumption. Within the limitations of the Plan, the
Committee may modify, assume, cancel or accept the cancellation of Options in
return for the grant of new Options for the same or a different number of Shares
and at the same or a different exercise price, provided, however, no
modification, assumption or cancellation of an Option shall, without the written
consent of the Participant, impair the Participant's rights or increase or
decrease the Participant's obligations under such Option.
9.05 Buyout Provisions. The Committee may at any time (a) offer to buy out
for a payment in cash or cash equivalents an Option previously granted or (b)
authorize a Participant to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.
Article X --Termination and Amendment of the Plan
10.01 Termination or Amendment. No Incentive Stock Option shall be granted
on or after the tenth anniversary of the later of (a) the Effective Date of the
Plan or (b) the date when the Board adopted the most recent increase in the
number of Shares available under Article IV that was approved by the Company's
stockholders. Termination of the Plan and all amendments of the Plan shall be
subject to the approval of the Company's stockholders. No Awards shall be
granted after termination of the Plan.
10.02 Effect of Amendment. Except as provided in Article IX hereof, rights
and obligations under any Award granted before any amendment of the Plan shall
not be adversely altered or impaired by such amendment, except with the consent
of the Participant.
Article XI -- Non-Exclusivity of the Plan
The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive or stock option
arrangement or as creating any limitations on the power of the Board to adopt
such other incentive or stock option arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
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Article XII -- Limitation of Liability
12.01 Limitation. As illustrative of the limitations of liability of the
Company, but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:
(a) give any officer, employee or Consultant any right to be granted
an Award other than at the sole discretion of the Committee;
(b) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(c) limit in any way the right of the Company or its Subsidiaries to
terminate the employment or services of any person at any time; or
(d) be evidence of any agreement or understanding, expressed or
implied, that the Company, or its Subsidiaries, will retain the services
of any person or employ any person in any particular position, at any
particular rate of compensation or for any particular period of time.
12.02 Liability and Indemnification.
(a) Notwithstanding any provision herein to the contrary, neither
the Company, any of its Subsidiaries nor any individual acting as an
employee, agent, or director of the Company or any Subsidiary shall be
liable to any Participant, former Participant, designated beneficiary, or
any other person for any claim, loss, liability or expense incurred in
connection with the Plan, unless attributable to fraud or willful
misconduct on the part of the Company, Subsidiary or any such employee,
agent, or director of the Company or Subsidiary.
(b) The Company shall indemnify, to the fullest extent permitted by
law, members of the Committee and directors and employees of the Company,
both past and present, to whom are or were delegated duties,
responsibilities or authority with respect to the Plan, against any and
all claims, losses, liabilities, fines, penalties and expenses (including,
but not limited to, all legal fees relating thereto), reasonably incurred
by or imposed upon such persons, arising out of any act or omission in
connection with the operation and administration of the Plan, other than
fraud or willful misconduct.
Article XIII -- Regulations and Other Approvals; Governing Law
13.01 Governing Law. This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of the
State of Iowa.
13.02 Obligation to Issue Shares. The obligation of the Company to sell or
deliver Shares with respect to Options granted under the Plan shall be subject
to all applicable laws, rules and regulations, including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
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13.03 Mandatory Changes. Except as otherwise provided in Article X, the
Board may make such changes in the Plan or any Agreement as may be necessary or
appropriate to comply with the rules and regulations of any governmental
authority or securities exchange or association, or to obtain for Participants
granted Incentive Stock Options, the tax benefits under the applicable
provisions of the Code and regulations promulgated thereunder.
13.04 Securities Laws. Each Award is subject to the requirement that, if
at any time the Committee determines, in its absolute discretion, that the
listing, registration or qualification of Shares issuable pursuant to the Plan
is required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the grant of an Award or the
issuance of Shares, no Awards shall be granted or payment made or Shares issued,
in whole or in part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions as acceptable to
the Committee.
13.05 Transfer Restrictions. In the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act or regulations thereunder, and the Company may
place a restrictive legend on the share certificate indicating such
restrictions. Furthermore, the Committee may require a Participant receiving
Shares pursuant to the Plan, as a condition precedent to receipt of such Shares,
to represent to the Company in writing that the Shares acquired by such
Participant are acquired for investment only and not with a view to
distribution.
13.06 Share Agreements. The Committee, in its sole discretion, may require
any Participant, beneficiary, guardian or legal representative of a Participant
or any other person to execute one (1) or more agreements, relating to the
Shares of the Company, with the Company and/or any of the Company's
shareholders; and no Share may be issued by the Company pursuant to an exercise
of an Option, unless and until such agreements, if any, are executed.
Article XIV --Miscellaneous
14.01 Multiple Agreements. The terms of each Award may differ from, other
Awards granted under the Plan at the same time, or at any other time. The
Committee may also grant more than one Award to a given Participant during the
term of the Plan, either in addition to, or in substitution for, one or more
Awards previously granted to that Participant. The grant of multiple Awards may
be evidenced by a single Agreement or multiple Agreements, as determined by the
Committee.
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14.02 Withholding of Taxes.
(a) Whenever the Company proposes to issue or transfer Shares under
the Plan, the Company shall have the right to require the Participant to
remit to the Company prior to the issuance of any stock certificates and
to deduct from any payment of cash to the Participant (whether pursuant to
the Plan or otherwise) an amount sufficient to satisfy any federal, state,
and local withholding tax requirements.
(b) With the consent of the Committee, any Participant may satisfy,
in whole or in part, the obligation to pay the Participant's statutory
withholding tax obligations by electing to surrender Shares that have a
Fair Market Value on the date of exercise equal to the amount of cash
required to be withheld. All elections shall be irrevocable, and be made
in writing and signed by the Participant prior to the day of exercise.
(c) The Agreement evidencing any Incentive Stock Options granted
under this Plan shall provide that if the Participant makes a disposition,
within the meaning of Section 424(c) of the Code and regulations
promulgated thereunder, of any Share or Shares issued to such Participant
pursuant to such Participant's exercise of an Incentive Stock Option, and
such disposition occurs within the two (2) year period commencing on the
day after the date of grant of such Option or within the one (1) year
period commencing on the day after the date of transfer of the Share or
Shares to the Participant pursuant to the exercise of such Option, such
Participant shall, within ten (10) days of such disposition, notify the
Company thereof and thereafter immediately deliver to the Company any
amount of federal, state or local income taxes and other amounts that the
Company informs the Participant the Company is required to withhold.
14.03 Designation of Beneficiary.
(a) A Participant may, with the consent of the Committee, designate
a beneficiary or beneficiaries to receive, in the event of such
Participant's death, any Award or Shares payable to such Participant under
the Plan. The Participant may revoke or amend a designation at any time by
a subsequent written designation. However, no such designation, revocation
or amendment shall be honored by the Company unless signed and dated by
the Participant (and the Participant's spouse where required by law) and
delivered to the Company within the Participant's lifetime. The Company
makes no guarantee or assurance that any beneficiary form supplied by it
will be effective under the laws of the applicable jurisdiction to
transfer rights to a beneficiary at the time of a Participant's death. The
Participant is solely responsible for determining whether any beneficiary
designation is in compliance with such laws.
(b) In the event of the death of a Participant and in the absence of
a beneficiary validly designated under the Plan who is living at the time
of such Participant's death, the Company shall deliver such Options and/or
amounts payable to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed
(to the knowledge of the Company), the Company, in its discretion, may
deliver such Options and/or amounts payable to the spouse or to any one or
more dependents or relatives of the Participant, or if no spouse,
dependent
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or relative is known to the Company, then to such other person as the
Company may designate.
14.04 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
14.05 Severability. In the event any portion of this Plan is found to be
unenforceable or contrary to any applicable law, then said unenforceable or
conflicting portion of the Plan shall be deemed null and void and the Board may
modify the Plan in order to most closely accomplish the goals of the Plan while
staying within the bounds of enforceability and within the purview of any
applicable law with which the offending portion may have been in conflict.
14.06 Successors. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
14.07 Headings and Captions. The headings and captions in this Plan are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
IN WITNESS WHEREOF, this Plan is made effective as of the day, month and
year first above written.
CE SOFTWARE, INC.
By:_____________________________________
Printed Name: John S. Kirk
Title: President
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